Market Commentary

June was another messy month for markets, with conflicting data and political upheaval creating further uncertainty over whether key interest rates would be coming or going in the short term.

In the US, a few tech stocks staged stomach-churning retreats during the month as investors became jumpy over stratospheric valuations – Nvidia’s in particular. However, broader indices remained calm and held up remarkably well overall.

The case for US interest rate cuts remained murky. On one hand, inflation came in softer than expected and consumer sentiment plummeted, on the other accelerating wages and a robust jobs market blew expectations out of the water. The US Federal Reserve gave short shrift to those who had dared dream of markedly lower interest rates in 2024 by keeping them on hold again and projecting only one cut before the end of the year.

Our local market struggled to make much headway again amid a paucity of encouraging news. Data indicated the economy pulled itself out of recession in the first quarter. However, it was by such a slim margin you had to squint to see it, with several economists speculating that we gave up that ground in the second quarter. Flagging business and consumer confidence did little to dispel the notion.

Investor spirits were similarly lacklustre across the Tasman after inflation refused to play nice. Aussie consumer prices rose faster than expected in May, prompting speculation that the RBA would go against the global grain and lift interest rates in August. Meanwhile, the economy chalked up its weakest growth since 1992 (covid years aside).

Against this backdrop, the S&P 500 rose 3.5% in June, while the tech-focused Nasdaq was up 6.0%. On the other hand, the NZX 50 fell 1.3%, while the ASX 200 was down 0.9%.

The UK’s FTSE 100 finished the month down 1.3%, as investors stuck to the sidelines ahead of the imminent general election. Elsewhere, the European Central Bank cut interest rates for the first time in five years, joining Canada, Sweden and Switzerland who also lowered borrowing costs during the month.

GBP and AUD / NZD exchange rate change from 31 May 2024 to 30 June 2024:

GBP and AUD / NZD exchange rate change from 30 June 2023 to 30 June 2024: